Govt may be forced to bin fuel price liberalisation plan on soaring inflation

10 Feb 2010

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The government may have to rethink its plan to liberalise fuel prices, considering the response to the protests led by the opposition over rising food prices, which rocked the capital today. 

The Congress party was to meet late on Wednesday to deliberate on a liberalised fuel pricing regime that would see petrol and diesel prices rise but also prune fiscal costs for the government. 

Food prices are increasing on an annual rate of around 20 per cent which is the highest in 11 years with the government in no position to stem the upswing, without impacting growth in an economy reviving from a six-year-low pace of  growth.

Inflation has provided and convenient handle for opposition parties to flog the ruling party that has a good support base in the poverty stricken rural regions. 

While the main opposition party the Bharatiya Janata Party (BJP) mobilised 5,000 supporters to near the parliament in the capital, big demonstrations were also reported from Orissa.  

The protests came even as the oil minister, Murli Deora,  said the minstry's recommendations on a proposal to review pricing of fuel would be sent to the cabinet. The proposals call for elimination of price controls on petrol and diesel and an income-linked increase in kerosene and cooking gas prices. 

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